Bond House of the Year - JPMorgan
January 17, 2018 |
Latin American issuers surpassed all expectations in the cross-border bond market last year, with 2017 breaking the record from 2015
Last year was a blockbuster for cross-border bond issuers from Latin America. Argentina remained active, becoming only the second sovereign issuer from Latin America to print a century bond.
In Brazil, several issuers returned to the market, accompanied by first-time issuers like local airlines Gol and Azul. With investor appetite high and yields at a record low, debut issuers saw an opportunity to raise cheap funding, and frequent issuers saw a chance to refinance debt.
JPMorgan led some of the region’s most noteworthy transactions, including Sigma’s sale of €600 million ($722 million) in 2.625% 2024 bonds.
Last year exceeded expectations, according to Lisandro Miguens, the head of debt capital markets at JPMorgan, “because at the end of 2016, we were looking at [US President Donald] Trump and rising interest rates.”
Concerns about NAFTA and Trump’s trade policies were muted through 2017. “The Trump event has so far been positive for the markets, not negative,” Miguens says. Despite rising interest rates in 2017, Miguens says the markets were surprised by the strength of the region’s economic growth.
“The three largest economies in the region [Brazil, Mexico and Argentina] performed better from a growth perspective and that has been welcomed by the market,” Miguens says.
Miguens expects 2018 to be like 2017 “or maybe a mix between 2017 and 2016,” with the wildcard being elections in Brazil, Mexico and Colombia.
Several corporate issuers have debts coming due in the next two years, which will encourage issues to refinance their debt portfolios, Miguens says. “With Latin economies growing in the 2% area in 2017 and probably higher this year, we are starting to look at clients’ needs to bolster capex to sustain growth. That will be a good dynamic in the markets,” he says.
Miguens sees Argentina being the busiest market in 2018, fueled by energy spending and possibly $6 billion in infrastructure public-private partnerships. LF